Readers' comments

I wrote this commentary about Opel when you published your previous article, still seems valid after this article.

GM is sealing its final fate as a car manufacturer by selling Opel. In the coming years GM will go through bankruptcy, drastic reductions in capacity and sales and finally, in a decade or so liquidation.

Opel's GM cars are engineered using German technology, they are smaller, much more fuel efficient and more technologically advanced than their American GM counterparts. In Brazil nearly all the GM cars sold are Opel designed cars made locally even if they have a Chevrolet badge.

If GM wants to survive as a company it desperately needs Opel technology. The recent reduction of oil prices appear to be just a hiccup and as oil goes above $100 then Americans will turn more and more to smaller vehicles with more efficient engines. The gas guzzling clunkers that are filling the GM sales lots are like the dinosaurs after the asteroid hit.

Instead of reinventing the wheel GM already owns the technology they need in their Opel subsidiary, if they sell it the will have to acquire that technology through R & D. Not an easy job when you're in chapter 11.

But as the front cover of this week's Economist shows, America's current system is no longer purely capitalistic; the decisions concerning GM no longer take into account what is best for the company. The decisions being taken are becoming about what is the best policy for maintaining jobs in the USA.

GM and Chrysler are dying because the American feral capitalist system as it was precludes state run health care and pensions systems in private corporations. These two old ladies have their backs bent to breaking point by carrying an ever heavier load of health care and pension costs for current and past employees.

The Fiat deal makes the most industrial sense. As they stated, car manufacturers making less than the millions of cars they consider necessary to remain viable in the global market are doomed to obscurity or bankruptcy. GM is already bankrupt and is being kept alive by massive government involvement. The Magna deal has insufficient volume to survive long term and the hedge fund is only in the deal to make a quick profit irrespective of the effect on the job market in these uncertain times.
The German government would be wise to change from backing Magna to Fiat.

GM/Opel has received an unsecured “immediate credit” amounting to 1.5 billion euros from the German taxpayer. The taxpayer is further securing Opel loans of additional €3 bln. Thus the collateral holder (the German people) has an unmistakable voice in the matter – which means above all: Saving workplaces for fellow Germans – not necessarily saving “Opel” or its GM shareholders.

If GM wants to change this situation it just has to pay back the owed funds up front or pay the market interest for unsecured loans (12-15%p.a.), that’s all. - Or GM hands out shares to the German taxpayer at the market price when it received the money, as it did (had to) in the U.S. This way the German taxpayer participates in any market recovery of GM shares and GM can "spin as long as it wants". Isn’t that how capitalism works?

Fiat's plan for Opel did not "involve heavy job losses". It envisioned the closure of one engine plant in Germany - which was therefore politically unacceptable to German politicians in an election year. Marchionne's plan was based on industrial, not political logic. Fiat has also announced the construction of a new engine plant in Poland for next year - 500,000 high-tech engines annually in an area where the workers make 400 euros a month.
Clearly something has to be cut at Opel, and the engine plant is un-economic. GM and the German government are equally at fault for wanting their cake and eating it too: at the expense of European unity, which will not help Opel sales in the future.
I feel sorry for Opel/Vauxhall employees: their uncertain situation will not be resolved any time soon. My prediction: in the end, GM will not sell Opel, finding other financing but assuming for themselves the necessity of closing plants/redundancies, etc.

GM should take the chance to rebuild Opel/Vauxhaul. I agree it was always a bad idea to sell off this asset as its expertise in small cars is needed for GM, even in the US.
The issue is its size. It is too big with too many factories. Slice off at least 4 factories with at least 1 in Germany.
What it may do is a deal with Magna with GM retaining a large slice but Magna running the operations in Europe.
More proof the EU is a fudge and a fake. If Germanys was EU minded it would share the burden of closures but it doesn't care.

I do not see the point here. Why should GM still try and sell Opel? I always thought Opel was the crown jewel of GM's european operations. Take away Opel and you have Chevy which is still only growing in Europe. That will leave GM with a market share of next to nothing in Europe. I am pretty sure that is not what they want. Specially when Russia is poised to become Europe's largest market. They can use the twin brands Opel and Chevrolet to attack the Russian market and walk home with a pretty decent market share. Is that too difficult to understand? The problem is with Germany. They dont allow GM to reign in overcapacity. Once a factory in Germany is open, it can never be shut or revamped.
It made some sense to part with Opel when GM was preparing for bankruptcy. Now that GM is out, i think they should completely rethink their strategy. Well, there is nothing much to think. Just keep Opel.
Heard Fritz is preparing a plan to keep Opel. Way to go. I wonder why Lutz is not vocal about this issue. They have tied his hands by giving him a marketing job i guess.

The German government was proven as a bad negotiator. It has given too much financial assurance to GM and and besides that failed to set a deadline for agreement Now it has lost the ideal moment for the settlement. The Americans know that German economy has start recovering and they are aware that it will progressively diminish the Opel problems. Time is on the American side now. They now that Opel won't go bankruptcy because German govenment will intervene to avoid that. So why should they sell Opel to Magna without bargaining enough to take as many advantages as they can? Mrs. Merkel's government are now in clearly a weaker position in this negotiation.